How does Canopy Lawn Care recognize revenue on fixed-price contracts for commercial roofing services?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
Bumble-LA's commercial roofing services are provided through discrete project agreements. The contracts are awarded on a competitively bid and negotiated basis. The Company's contracts generally include a single performance obligation for which revenue is recognized over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer. For cost-plus fee contracts, the Company recognizes revenue when services are performed and contractually billable based upon the hours incurred and agreed-upon hourly rates as well as subcontractor costs and materials cost. Revenue on fixed-price contracts is recognized and invoiced over time using the cost-to-cost percentage-of-completion method.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 55)
What This Means (2025 FDD)
According to the 2025 FDD, Bumble-LA, not Canopy Lawn Care, provides residential and commercial roofing services. For Bumble-LA's commercial roofing services, which are provided through discrete project agreements awarded on a competitively bid and negotiated basis, revenue recognition depends on the contract type.
For cost-plus fee contracts, Bumble-LA recognizes revenue when services are performed and contractually billable, based on hours incurred, agreed-upon hourly rates, subcontractor costs, and materials cost. However, for fixed-price contracts, revenue is recognized and invoiced over time using the cost-to-cost percentage-of-completion method. This means that as costs are incurred on the project, a corresponding percentage of the total contract revenue is recognized.
This accounting method provides a way to match revenue with expenses over the life of the project, rather than waiting until the project is fully completed. This is a common practice in industries with long-term contracts, as it gives a more accurate picture of the company's financial performance during the project's duration. A prospective Canopy Lawn Care franchisee should be aware that this revenue recognition method applies specifically to Bumble-LA's commercial roofing services, and not necessarily to the services offered by Canopy Lawn Care.